The long-term off-take agreement model may justify use of a cost-plus approach to the transfer-pricing of mine sales to an affiliate

In order that a mining company can eliminate risk with respect to the price of production from a new mine, it may enter into an "off-take agreement" with an arm’s length distributor for the sale of the mine production at a fixed or certain price.  Harold McClure suggests that a similar arrangement entered into instead with an affiliated distributor "poses a potential exception to the claim that the cost-plus approach is not a viable method" to establish a transfer price for sales of product by the mining company to its affiliate.  This point appears to be at least partly what is at issue in the Cameco transfer-pricing litigation (so far reported only on document–production issues).

Neal Armstrong.  Summary of J. Harold McClure, "Evaluating Whether a Distribution Affiliate Pays Arm's-Length Prices for Mining Products", Journal of International Taxation, July 2014, p. 33 under s. 247(2).